MessageOf His Excellency Manuel L. QuezonPresident of the PhilippinesTo theFirst National AssemblyOnRevision of the System of Taxaton

[Delivered at the opening of the third session of the NationalAssembly, January 24, 1938]Gentlemen of the National Assembly:The state of the nation remains practically the same as reportedin my annual message to your Honorable Body at thebeginning of your last regular session on the 18

of October,1937.We are earnestly concerned with social justice. Without a strictapplication of social justice to all elements of the community,general satisfaction of the people with their government isimpossible to achieve. Here, in the just and equitable solution of social problems, is the real test of the sufficiency of democracyto meet present-day conditions of society.Social justice involves many and varied questions, such astaxation, wages, land ownership, insurance against accidentsand old age, etc.

I desire to direct your attention at this time to one subject only –taxation- which we are solemnly committed to revise in order toplace the burden upon those who should and can best carry it.Taxation is imposed in the interest of the nation; to keep peaceand maintain order; to repel invasion; to improve the livingconditions of the people; to educate them; to promoteagriculture, industry and trade.The power to tax may also be used to prevent the accumulationof vast wealth in a few hands. This is not to deny the right of property of the individual, but it is to affirm that this right maybe limited by the State when social well-being demands it. Theroot of the world-wide discontent among peoples, which gavebirth to Communism in Russia and which has been at thebottom of every revolution of the last forty years, has been theutter disregard by governments of the social purpose of property. Selfish interests have been allowed to dictategovernment policies affecting social and economic life.In the past, taxation has not been concerned with principles of justice and rarely has it been concerned with bettering thepeople. Rather it has sought only to produce revenues and toplace the burdens on the backs of those least able toremonstrate. It has done this by taxes on consumption, onsales, on licenses to engage in business, trade or profession, andby excessive charges on services which should be rendered bythe Government and for which only a sufficient charge shouldbe made to cover the cost. Those who rule have not paid theirshare. They have exempted the wealth they owned and theincomes they enjoyed almost wholly from taxation. This hasbeen true throughout the world. It has been true of thePhilippines as well.Our tax system, unlike our political system, is still a heritage of earlier centuries, out of harmony with those principles which

should guide progressive nations today. The Filipino peoplehave one of the most progressive constitutions in the world.That Constitution is built not only on the principle of politicalequality but also in the added principle of social justice.It remains for us to parallel our achievement in the realm of political science by a similar achievement in the real of economic and social justice.The present system of taxation in the Philippines is a source of the greatest injustice from which our people suffer. It mayproperly be said that our burdens of taxation rest most heavilyupon the masses, and very lightly upon the rich. Bearing inmind the income of the rich as compared to the earnings of thelaboring class, it is a fact that the richer the taxpayer the less hecontributes proportionally to the maintenance of theGovernment. The picture of the distribution of taxes in thePhilippines is this: The wage earner and the small farmer as aclass carry most of the burden, then comes the middle class, andlastly the upper class. This wealthy upper class constitutes avery small percentage of our population.In your last session you have done away with the one direct taxwhich was imposed upon the poor in the same amount as uponthe rich –the cedula tax. But even after the elimination of thisodious tax which accrued exclusively to the provincial andmunicipal governments, it is still true that as far as the NationalGovernment is concerned, its income comes mostly fromcustoms duties and internal-revenue taxes. In the case of customs duties, the tax is ultimately paid by the consumer, andin cases of internal-revenue taxes, with very few exceptions, thebulk of the tax is also paid by the consumer. Needless to say, if most of these taxes are being paid by the consumer, it is thegreat mass of the people who are carrying the burden.